Online Tax Consideration Expected to Make Headway in 2021

Online taxation will be a hotly contested issue in the 2021 Florida legislative session, potentially reaching into every industry that sells goods and services online in the Sunshine State. How the legislation is written could have a major impact on many businesses selling goods and services online, including those currently remitting state sales tax. 

In the House, three-term Rep. Chuck Clemons (R-Gainesville) has filed House Bill 51, which defines a “retail sale” as including remote sales and sales made through an internet marketplace. The Senate is expected to file a companion bill soon.

In addition to support from Republican Party of Florida Chairman Sen. Joe Gruters, Sen. President Wilton Simpson sent a clear message last month that he wants to pass a version of this bill. As the presiding officer, he will have tremendous sway over the legislative process and could push it through. The state budget may be in need of a boost in revenues, as COVID-19 has hit the Florida budget to the tune of billions of dollars. Many conservatives believe this change in the law is not a tax increase, and that it is the collection of taxes already owed the state. This framing of the issue could result in the passage of the legislation. 

Retailers that conduct remote sales to customers in Florida are wise to take heed, as committees will start hearing bills in early- to mid-January, while session kicks off March 2, 2021.

Background on Online Tax Issue

Online taxation is often referred to as the “Wayfair tax”, getting its name from a Supreme Court case, South Dakota v. Wayfair, Inc. On June 21, 2018, the U.S. Supreme Court ruled 5-4 that online retailers may now be required to collect sales tax in states where they do not maintain a physical presence. The majority’s view was that requiring only brick-and-mortar businesses to collect and remit sales tax put them at a disadvantage against online retailers, some of whom are doing significantly more sales in that state.

Since that decision, the vast majority of states that maintain a sales tax have passed some version of policy to address this issue. As of April 2020, Florida was one of only two states that has not enacted any legislation to require online retailers to collect sales tax. Legislation has been filed in past years, but failed to pass. 

This year appears to be different in Florida.